UGI Corporation (NYSE: UGI) today reported financial results for
the fiscal quarter ended June 30, 2021.
HEADLINES
- Q3 GAAP diluted earnings per share ("EPS") of $0.71 and
adjusted diluted EPS of $0.13 compared to GAAP diluted EPS of $0.41
and adjusted diluted EPS of $0.08 in the prior-year period.
- Year-to-date GAAP diluted EPS of $4.48 and adjusted diluted EPS
of $3.30 compared to GAAP diluted EPS of $2.49 and adjusted diluted
EPS of $2.81 in the prior-year period.
- Q3 reportable segments earnings before interest expense and
income taxes1 ("EBIT") of $98 million compared to $81 million in
the prior-year period.
- Strong results from our diversified business led by increased
total margins at UGI International in comparison to the prior-year
period and new base rates at UGI Utilities that went into effect on
January 1, 2021.
- Completed another key milestone in the regulatory approval
process related to the pending Mountaineer acquisition. The process
is progressing well and we anticipate that the acquisition could
potentially close as early as this fiscal year.
ESG HIGHLIGHTS
- On May 14, 2021, UGI released its third ESG report and
announced a commitment to reduce Scope I GHG Emissions by 55% by
2025.
- On May 17, 2021, UGI announced that UGI International and SHV
Energy intend to launch a joint venture to advance the production
and use of Renewable Dimethyl Ether (“rDME”) in the LPG
industry.
- On May 19, 2021, UGI announced that its President and CEO
signed the CEO Action for Diversity & Inclusion™ pledge, the
largest CEO-driven business commitment to advance diversity and
inclusion in the workplace.
- On August 4, 2021, UGI announced that Energy Services entered
into definitive agreements to develop innovative food waste
digester projects to produce RNG in Ohio and Kentucky, through its
investment in Hamilton RNG.
"UGI delivered strong third quarter results with GAAP diluted
EPS of $0.71 and adjusted diluted EPS of $0.13," said Roger
Perreault, President and Chief Executive Officer of UGI
Corporation. "This performance was driven by higher total margins
at UGI International primarily due to significantly colder than
prior-year weather, new base rates in our Gas Utility that went
into effect on January 1st, and execution on our key priorities,
including our growth investments and business transformation
initiatives. As a result of the strong year-to-date performance, we
now expect the full year adjusted diluted EPS to be at the upper
end of our guidance range of $2.90 - $3.002 for this fiscal
year.
“Our businesses progressed well on several growth initiatives
during the quarter. UGI Utilities continues to see solid customer
growth and is on track to deliver compound annual rate base growth
in line with historical trends, through the record capital
expenditure plan. In connection with the pending acquisition of
Mountaineer Gas, the largest gas distribution company in West
Virginia, we filed a unanimous settlement before the Public Service
Commission of West Virginia ("the Commission"). We provided
testimony in a hearing before the Commission and expect to file a
Proposed Order by August 10th. While the precise timing of the
Commission's approval is uncertain, we have completed several key
steps in the regulatory approval process and now expect to close
well before the end of the calendar year, and even potentially
within this fiscal year. The transaction remains accretive to
earnings in the first full year of operation.
“UGI continues to execute on the renewables strategy that we
discussed during the June 2021 Investor Day. Today, we announced
that UGI Energy Services entered into definitive agreements to
produce renewable natural gas in Ohio and Kentucky, through the
Hamilton RNG joint venture. This project aligns with our renewables
strategy and our goal of providing affordable, reliable and
sustainable energy solutions to our customers. Our teams continue
to explore an exciting range of renewables opportunities with
strong return profiles in the US and Europe.
“We remain focused on execution and are confident that the
company is well positioned to deliver another strong year of
financial performance. We are excited about the opportunities ahead
and are committed to maintaining the proven track record of
delivering on our financial and strategic commitments.”
KEY DRIVERS OF THIRD QUARTER RESULTS
- AmeriGas: National accounts volume increased 18%; lower total
margin was primarily due to a decrease in cylinder exchange volumes
as sales normalized after the higher pandemic volumes seen in Q3
FY20 resulting in slightly lower average retail unit margins
- UGI International: Retail volume increased 21% on weather that
was 54.7% colder than the prior-year period; Q3 FY21 EBIT of $41
million compared to $21 million in the prior-year period
- Midstream & Marketing: Higher EBIT reflecting equity income
from the investment in Pine Run; Q3 FY21 EBIT of $21 million
compared to $20 million in the prior-year period
- UGI Utilities: Higher EBIT largely driven by the increase in
base rates, higher margin from large delivery service customers and
customer growth
EARNINGS CALL AND WEBCAST
UGI Corporation will hold a live Internet Audio Webcast of its
conference call to discuss the quarterly earnings and other current
activities at 9:00 AM ET on Thursday, August 5, 2021. Interested
parties may listen to the audio webcast both live and in replay on
the Internet at
https://www.ugicorp.com/investors/financial-reports/presentations
or by visiting the company website https://www.ugicorp.com and
clicking on Investors and then Presentations. A telephonic replay
will be available from 12:00 PM ET on August 5 through 11:59 PM ET
August 12. The replay may be accessed toll free at 855-859-2056 and
internationally at +1 404-537-3406, conference ID 7457165.
ABOUT UGI
UGI Corporation is a distributor and marketer of energy products
and services. Through subsidiaries, UGI operates natural gas and
electric utilities in Pennsylvania, distributes LPG both
domestically (through AmeriGas) and internationally (through UGI
International), manages midstream energy assets in Pennsylvania,
Ohio, and West Virginia and electric generation assets in
Pennsylvania, and engages in energy marketing, including renewable
natural gas, in twelve states and the District of Columbia and
internationally in France, Belgium, the Netherlands and the UK.
Comprehensive information about UGI Corporation is available on
the Internet at https://www.ugicorp.com.
USE OF NON-GAAP MEASURES
Management uses "adjusted diluted earnings per share," a
non-GAAP financial measure, when evaluating UGI's overall
performance. Management believes that this non-GAAP measure
provides meaningful information to investors about UGI’s
performance because it eliminates the impact of (1) gains and
losses on commodity and certain foreign currency derivative
instruments not associated with current-period transactions and (2)
other significant discrete items that can affect the comparison of
period-over-period results. Volatility in net income at UGI can
occur as a result of gains and losses on commodity and certain
foreign currency derivative instruments not associated with
current-period transactions but included in earnings in accordance
with U.S. generally accepted accounting principles ("GAAP").
Non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP and should be considered in addition to, and
not as a substitute for, the comparable GAAP measures.
Tables on the last page reconcile net income attributable to UGI
Corporation, the most directly comparable GAAP measure, to adjusted
net income attributable to UGI Corporation, and diluted earnings
per share, the most comparable GAAP measure, to adjusted diluted
earnings per share, to reflect the adjustments referred to
above.
1 Reportable segments earnings before interest expense and
income taxes represents an aggregate of our operating segment level
EBIT as determined in accordance with GAAP.
2 Because we are unable to predict certain potentially material
items affecting diluted earnings per share on a GAAP basis,
principally mark-to-market gains and losses on commodity and
certain foreign currency derivative instruments we cannot reconcile
fiscal year 2021 adjusted diluted earnings per share, a non-GAAP
measure, to diluted earnings per share, the most directly
comparable GAAP measure, in reliance on the “unreasonable efforts”
exception set forth in SEC rules.
USE OF FORWARD-LOOKING STATEMENTS
This press release contains statements, estimates and
projections that are forward-looking statements (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended).
Management believes that these are reasonable as of today’s date
only. Actual results may differ significantly because of risks and
uncertainties that are difficult to predict and many of which are
beyond management’s control. You should read UGI’s Annual Report on
Form 10-K for a more extensive list of factors that could affect
results. Among them are adverse weather conditions (including
increasingly uncertain weather patterns due to climate change) and
the seasonal nature of our business; cost volatility and
availability of all energy products, including propane, natural
gas, electricity and fuel oil as well as the availability of LPG
cylinders; increased customer conservation measures; the impact of
pending and future legal or regulatory proceedings, inquiries or
investigations, liability for uninsured claims and for claims in
excess of insurance coverage; domestic and international political,
regulatory and economic conditions in the United States and in
foreign countries, including the current conflicts in the Middle
East and the withdrawal of the United Kingdom from the European
Union, and foreign currency exchange rate fluctuations
(particularly the euro); the timing of development of Marcellus and
Utica Shale gas production; the availability, timing and success of
our acquisitions, commercial initiatives and investments to grow
our business; our ability to successfully integrate acquired
businesses and achieve anticipated synergies; the interruption,
disruption, failure, malfunction, or breach of our information
technology systems, including due to cyber-attack; the inability to
complete pending or future energy infrastructure projects; our
ability to achieve the operational benefits and cost efficiencies
expected from the completion of pending and future transformation
initiatives including the impact of customer disruptions resulting
in potential customer loss due to the transformation activities;
uncertainties related to the global pandemics, including the
duration and/or impact of the COVID-19 pandemic; and the extent to
which we are able to utilize certain tax benefits currently
available under the CARES Act and similar tax legislation and
whether such benefits will remain available in the future.
SEGMENT RESULTS ($ in millions, except where otherwise
indicated)
AmeriGas Propane
For the fiscal quarter ended June 30,
2021
2020
Increase (Decrease)
Revenues
$
526
$
451
$
75
17
%
Total margin (a)
$
259
$
273
$
(14
)
(5
)%
Operating and administrative expenses
$
212
$
209
$
3
1
%
Operating income/earnings before interest
expense and income taxes
$
11
$
19
$
(8
)
(42
)%
Retail gallons sold (millions)
184
182
2
1
%
Heating degree days - % colder than normal
(b)
2.5
%
16.9
%
Capital expenditures
$
26
$
30
$
(4
)
(13
)%
- Temperatures were 12.3% warmer than the prior-year period.
- Retail gallons sold increased 1% reflecting higher national
account volumes, partially offset by lower cylinder exchange
volumes compared to the significant increase experienced in the
prior-year period, lower residential volumes, structural
conservation and other residual volume loss.
- Total margin decreased $14 million primarily due to lower
higher-margin residential and cylinder exchange volumes. This was
partially offset by an increase in lower-margin national account
volumes.
- Operating and administrative expenses increased $3 million
largely due to higher vehicle fuel and maintenance expenses,
advertising costs and general insurance costs. The effect of these
increases were partially offset by LPG transformation savings.
- Operating income and earnings before interest expense and
income taxes each decreased $8 million reflecting the lower total
margin ($14 million) and higher operating and administrative
expenses, slightly offset by higher other income from finance
charges and one-time gains on asset sales.
UGI International
For the fiscal quarter ended June 30,
2021
2020
Increase
Revenues
$
572
$
371
$
201
54
%
Total margin (a)
$
217
$
166
$
51
31
%
Operating and administrative expenses
(a)
$
144
$
121
$
23
19
%
Operating income
$
40
$
17
$
23
135
%
Earnings before interest expense and
income taxes
$
41
$
21
$
20
95
%
LPG retail gallons sold (millions)
166
137
29
21
%
Heating degree days - % colder (warmer)
than normal (b)
24.4
%
(17.3
)%
Capital expenditures
$
21
$
20
$
1
5
%
UGI International base-currency results
are translated into U.S. dollars based upon exchange rates
experienced during the reporting periods. Differences in these
translation rates affect the comparison of line item amounts
presented in the table above. The functional currency of a
significant portion of our UGI International results is the euro
and, to a much lesser extent, the British pound sterling. During
the 2021 and 2020 three-month periods, the average unweighted
euro-to-dollar translation rates were approximately $1.21 and
$1.10, respectively, and the average unweighted British pound
sterling-to-dollar translation rates were approximately $1.40 and
$1.24, respectively.
- Retail volume increased 21% largely due to weather that was
54.7% colder than the prior-year period. The increased volume
reflects higher bulk and cylinder volumes including the recovery of
certain volume decreases due to the COVID-19 pandemic.
- Average propane wholesale selling prices in northwest Europe
were approximately 81% higher than the prior-year period.
- Total margin increased $51 million compared to the prior-year
period reflecting increases in volumes and the translation effects
of the stronger euro, partially offset by a slight decrease in
average LPG unit margins.
- The increase in operating and administrative expenses reflects
higher costs attributable to increased volumes, increased
compensation and employee benefits-related costs and the
translation effects of the stronger euro.
- Operating income increased $23 million compared to the
prior-year period reflecting the translation effects of the
stronger euro of $4 million.
- Earnings before interest expense and income taxes increased $20
million compared to the prior-year period due to the higher
operating income, partially offset by lower pre-tax realized gains
on foreign currency exchange contracts ($2 million).
Midstream & Marketing
For the fiscal quarter ended June 30,
2021
2020
Increase (Decrease)
Revenues
$
261
$
222
$
39
18
%
Total margin (a)
$
65
$
64
$
1
2
%
Operating and administrative expenses
$
31
$
31
$
—
—
%
Operating income
$
14
$
13
$
1
8
%
Earnings before interest expense and
income taxes
$
21
$
20
$
1
5
%
Heating degree days - % (warmer) colder
than normal (b)
(1.5
)%
21.0
%
Capital expenditures
$
3
$
15
$
(12
)
(80
)%
- Temperatures were 18.6% warmer than the prior-year period.
- Total margin increased $1 million primarily reflecting
increased margins from capacity management, gas gathering and
renewable energy marketing activities compared to the prior-year
period. The effect of these increases was partially offset by the
absence of margins attributable to HVAC and Conemaugh that were
divested in Fiscal 2020.
- Earnings before interest expense and income taxes reflects the
increase in total margin and equity income from the investment in
Pine Run, in comparison to the prior-year period.
UGI Utilities
For the fiscal quarter ended June 30,
2021
2020
Increase (Decrease)
Revenues
$
181
$
179
$
2
1
%
Total margin (a)
$
113
$
110
$
3
3
%
Operating and administrative expenses
$
59
$
61
$
(2
)
(3
)%
Operating income
$
24
$
21
$
3
14
%
Earnings before interest expense and
income taxes
$
25
$
21
$
4
19
%
Gas Utility system throughput - billions
of cubic feet
Core market
10
12
(2
)
(17
)%
Total
62
61
1
2
%
Gas Utility heating degree days - % colder
than normal (b)
5.0
%
25.4
%
Capital expenditures
$
112
$
68
$
44
65
%
- Gas Utility service territory experienced temperatures that
were 16.2% warmer than the prior-year period.
- Core market volumes decreased due to the warmer weather
compared to the prior-year period, partially offset by customer
growth.
- Total Gas Utility distribution throughput increased 1 bcf
reflecting higher large delivery service volumes, partially offset
by lower core market volumes.
- Total margin increased $3 million primarily due to increase in
base rates that went into effect on January 1, 2021 and higher
customer fees, partially offset by the decrease in core market
volumes.
- Operating income increased largely reflecting the higher total
margin.
(a)
Total margin represents total
revenue less total cost of sales. In the case of UGI Utilities,
total margin is reduced by revenue-related tax expenses. In the
case of UGI International, total margin represents revenues less
cost of sales and, in the 2020 three-month period, LPG cylinder
filling costs of $7 million. For financial statement purposes, LPG
cylinder filling costs in the 2020 three-month period are included
in "Operating and administrative expenses" on the Condensed
Consolidated Statements of Income (but excluded from operating and
administrative expenses presented above). For financial statement
purposes, LPG cylinder filling costs in the 2021 three-month period
are included in "Cost of Sales".
(b)
Beginning in Fiscal 2021,
deviation from average heating degree days is determined on a
rolling 10-year period utilizing volume-weighted weather data.
Prior-period amounts have been restated to conform to the
current-period presentation.
REPORT OF EARNINGS – UGI
CORPORATION
(Millions of dollars, except per
share)
(Unaudited)
Three Months Ended June 30,
Nine Months Ended June 30,
Twelve Months Ended June 30,
2021
2020
2021
2020
2021
2020
Revenues:
AmeriGas Propane
$
526
$
451
$
2,132
$
1,983
$
2,530
$
2,395
UGI International
572
371
2,106
1,726
2,507
2,118
Midstream & Marketing
261
222
1,086
1,017
1,316
1,264
UGI Utilities
181
179
923
901
1,052
1,033
Corporate & Other (a)
(44
)
(24
)
(238
)
(192
)
(272
)
(225
)
Total revenues
$
1,496
$
1,199
$
6,009
$
5,435
$
7,133
$
6,585
Earnings (loss) before interest expense
and income taxes:
AmeriGas Propane
$
11
$
19
$
391
$
390
$
374
$
381
UGI International
41
21
326
247
338
263
Midstream & Marketing
21
20
180
161
187
176
UGI Utilities
25
21
245
229
245
236
Total reportable segments
98
81
1,142
1,027
1,144
1,056
Corporate & Other (a)
208
96
353
(96
)
409
(199
)
Total earnings before interest expense and
income taxes
306
177
1,495
931
1,553
857
Interest expense:
AmeriGas Propane
(40
)
(41
)
(120
)
(124
)
(160
)
(165
)
UGI International
(8
)
(8
)
(21
)
(23
)
(29
)
(31
)
Midstream & Marketing
(10
)
(11
)
(31
)
(34
)
(39
)
(41
)
UGI Utilities
(14
)
(14
)
(42
)
(41
)
(55
)
(54
)
Corporate & Other, net (a)
(5
)
(6
)
(19
)
(25
)
(25
)
(32
)
Total interest expense
(77
)
(80
)
(233
)
(247
)
(308
)
(323
)
Income before income taxes
229
97
1,262
684
1,245
534
Income tax expense (c)
(79
)
(12
)
(320
)
(161
)
(294
)
(142
)
Net income including noncontrolling
interests
150
85
942
523
951
392
Deduct net income attributable to
noncontrolling interests, principally in AmeriGas Partners,
L.P.
—
—
—
—
—
79
Net income attributable to UGI
Corporation
$
150
$
85
$
942
$
523
$
951
$
471
Earnings per share attributable to UGI
shareholders:
Basic
$
0.72
$
0.41
$
4.51
$
2.50
$
4.55
$
2.31
Diluted
$
0.71
$
0.41
$
4.48
$
2.49
$
4.53
$
2.29
Weighted Average common shares outstanding
(thousands) (b):
Basic
209,099
208,598
208,934
208,989
208,863
204,168
Diluted
210,851
208,975
210,194
210,009
209,983
205,490
Supplemental information:
Net income (loss) attributable to UGI
Corporation:
AmeriGas Propane
$
(20
)
$
(15
)
$
204
$
198
$
162
$
189
UGI International
31
(11
)
222
137
258
141
Midstream & Marketing
8
7
107
93
106
99
UGI Utilities
9
4
157
147
146
141
Total reportable segments
28
(15
)
690
575
672
570
Corporate & Other (a)
122
100
252
(52
)
279
(99
)
Total net income attributable to UGI
Corporation
$
150
$
85
$
942
$
523
$
951
$
471
(a)
Corporate & Other includes
specific items attributable to our reportable segments that are not
included in profit measures used by our chief operating decision
maker in assessing our reportable segments' performance or
allocating resources. These specific items are shown in the section
titled "Non-GAAP Financial Measures - Adjusted Net Income
Attributable to UGI and Adjusted Diluted Earnings Per Share" below.
Corporate & Other also includes the elimination of certain
intercompany transactions.
(b)
Earnings per share for the twelve
months ended June 30, 2020 reflect 34.6 million incremental shares
of UGI Common Stock issued in connection with UGI's buy-in of the
outstanding common units of AmeriGas Partners, L.P. ("AmeriGas
Merger").
(c)
Income tax expense for the nine
and twelve months ended June 30, 2021 includes a $23 million income
tax benefit from adjustments due to a step-up in tax basis in Italy
as a result of Italian tax legislation.
Non-GAAP Financial Measures - Adjusted
Net Income Attributable to UGI and Adjusted Diluted Earnings Per
Share
The following tables reconcile net income attributable to UGI
Corporation, the most directly comparable GAAP measure, to adjusted
net income attributable to UGI Corporation, and reconcile diluted
earnings per share, the most comparable GAAP measure, to adjusted
diluted earnings per share, to reflect the adjustments referred to
previously:
Three Months Ended June 30,
Nine Months Ended June 30,
Twelve Months Ended June 30,
2021
2020
2021
2020
2021
2020
Adjusted net income attributable to UGI
Corporation (millions):
Net income attributable to UGI
Corporation
$
150
$
85
$
942
$
523
$
951
$
471
Net (gains) losses on commodity derivative
instruments not associated with current-period transactions (net of
tax of $94, $49, $147, $6, $176 and $(7), respectively)
(231
)
(114
)
(368
)
(15
)
(435
)
14
Unrealized losses on foreign currency
derivative instruments (net of tax of $(1), $(3), $(2), $(6), $(6)
and $0, respectively)
—
4
4
14
16
—
Acquisition and integration expenses
associated with the CMG Acquisition (net of tax of $0, $0, $0,
$(1), $0 and $(6), respectively)
—
—
—
1
—
12
Acquisition expenses associated with the
pending Mountaineer Acquisition (net of tax of $0, $0, $(1), $0,
$(1) and $0, respectively)
1
—
3
—
3
—
Business transformation expenses (net of
tax of $(6), $(3), $(15), $(13), $(19) and $(18), respectively)
15
4
42
30
57
46
AmeriGas Merger expenses (net of tax of
$0, $0, $0, $0, $0 and $0, respectively)
—
—
—
—
—
1
Impairment of assets held-for-sale (net of
tax of $0, $(15), $0, $(15), $0 and $(15), respectively)
—
37
—
37
2
37
Impairment of investment in PennEast (net
of tax of $0, $0, $0, $0, $0 and $0, respectively)
93
—
93
—
93
—
Impact of change in Italian tax law
—
—
(23
)
—
(23
)
—
Total adjustments (1) (2)
(122
)
(69
)
(249
)
67
(287
)
110
Adjusted net income attributable to UGI
Corporation
$
28
$
16
$
693
$
590
$
664
$
581
Adjusted diluted earnings per
share:
UGI Corporation earnings per share —
diluted (3)
$
0.71
$
0.41
$
4.48
$
2.49
$
4.53
$
2.29
Net (gains) losses on commodity derivative
instruments not associated with current-period transactions
(1.09
)
(0.55
)
(1.75
)
(0.07
)
(2.07
)
0.08
Unrealized losses on foreign currency
derivative instruments
—
0.02
0.03
0.07
0.09
—
Acquisition and integration expenses
associated with the CMG Acquisition
—
—
—
0.01
—
0.06
Acquisition expenses associated with the
pending Mountaineer Acquisition
—
—
0.01
—
0.01
—
Business transformation expenses
0.07
0.02
0.20
0.14
0.27
0.22
AmeriGas Merger expenses
—
—
—
—
—
—
Impairment of assets held-for-sale
—
0.18
—
0.17
—
0.18
Impairment of investment in PennEast
0.44
—
0.44
—
0.44
—
Impact of change in Italian tax law
—
—
(0.11
)
—
(0.11
)
—
Total adjustments (1) (3)
(0.58
)
(0.33
)
(1.18
)
0.32
(1.37
)
0.54
Adjusted diluted earnings per share
(3)
$
0.13
$
0.08
$
3.30
$
2.81
$
3.16
$
2.83
(1)
Corporate & Other includes
certain adjustments made to our reporting segments in arriving at
net income attributable to UGI Corporation, including the impact of
the tax benefits resulting from tax law changes during Fiscal 2020.
These adjustments have been excluded from the segment results to
align with the measure used by our chief operating decision maker
in assessing segment performance and allocating resources.
(2)
Income taxes associated with
pre-tax adjustments determined using statutory business unit tax
rates.
(3)
Earnings per share for the twelve
months ended June 30, 2020 reflect 34.6 million in incremental
shares of UGI Common Stock issued in connection with the AmeriGas
Merger.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006107/en/
INVESTOR RELATIONS 610-337-1000 Tameka Morris,
ext. 6297 Arnab Mukherjee, ext. 7498 Shelly Oates, ext. 3202
UGI (NYSE:UGI)
Historical Stock Chart
From Mar 2024 to Apr 2024
UGI (NYSE:UGI)
Historical Stock Chart
From Apr 2023 to Apr 2024